This could be the case when comparing high-yield bonds to stocks, or a real estate investment to emerging markets. Using CAGR would smooth the annual return over the period so the two alternatives would be easier to compare. As another example, let’s say an investor bought 55 shares of...
Here is a simple example. Suppose the value of an investment has grown from $1,000 to $1,800 over the last five years. After plugging in these values, the CAGR formula would look like this: CAGR = (1800/1000) ⅕ – 1 = (1.8)0.2 – 1 ...
Assuming start year is A2, start value is B2, end year is A5, and end value is B5, then below is the formula we can use. =(B5/B2)^(1/YEAR(A5)-YEAR(A2)) – 15. Format the result as a percentageFormat the cell with the CAGR result as a percentage, which gives us a 9.97%...
In order to calculate the simple growth rate formula, you need the use the following equation: SGR = (FV − PV) / PV × 100 where: SGR— Simple growth rate; FV— Future value of the investment; and PV— Initial balance (the present value of the investment). To fully understand this...
In any given year during the period, one investment may be rising while the other falls. This could be the case when comparing high-yieldbondstostocks, or a real estate investment to emerging markets. Using CAGR would smooth the annual return over the period so the two alternatives would be...